A CEPR Primer on Obama’s Trip to Jamaica and Panama

April 08, 2015

From April 8-11, President Obama will make his first trip south of the U.S. border since February of 2014.  On April 9, he will be in Kingston, Jamaica for meetings with Prime Minister Portia Simpson-Miller and the leaders of the Caribbean Community (CARICOM), an organization made up of 15 Caribbean governments.  Then on April 10 and 11, he will be in Panama City where he’ll participate in the seventh Summit of the Americas alongside the leaders of every independent government in the hemisphere including – for the first time – the Republic of Cuba.   

As we had predicted, the last Summit of the Americas that took place in Cartagena, Colombia in April of 2012 was a stormy affair for Obama, with many Latin American leaders objecting to the U.S.’ refusal to allow Cuba’s participation in the summit and criticizing the U.S. “War on Drugs” (not to mention that little scandal involving Secret Service agents and local prostitutes).  Following Obama’s efforts to begin the normalization of relations with Cuba and the lifting of his veto on Raul Castro’s participation in the Panama summit, many expect the U.S. president to receive a warmer welcome this time around.  But dark clouds have gathered again following the White House’s executive order declaring Venezuela an “extraordinary national security threat” and slapping senior Venezuelan officials with sanctions. 

On April 7, two senior White House officials, Ricardo Zúñiga – National Security Council Senior Director for Western Hemisphere Affairs – and Ben Rhodes – Deputy National Security Advisor for Strategic Communications – provided the press with a briefing on Obama’s trip to Kingston and Panama City.  As a service to our readers, CEPR has the pleasure of offering its own background briefing on some of the key issues that are sure to come up during Obama’s trip, with a few choice contributions from the aforementioned White House briefing.

Let’s start with Jamaica.  On April 9, President Obama will, in the words of Zúñiga, “have an opportunity to speak to Prime Minister Miller about (…) our strong support for Jamaica’s work to deal with a debt crisis, with a fiscal crisis, and its strong performance in the last two years in working with the IMF and World Bank and others to address that, in support of the prosperity and security of her citizens.”

As luck would have it (well, maybe not just luck), CEPR has just published a paper titled “Partners in Austerity: Jamaica, the U.S. and the IMF.”  The paper, authored by CEPR Research Associate Jake Johnston, shows that Jamaica’s recent economic performance has been anything but “strong” and that over two years into an IMF-backed economic program, Jamaica has the world’s most austere budget and is plagued by record-high debt (with a debt-to-GDP ratio of nearly 140 percent) and low economic growth.  Johnston notes:

[Jamaica’s] economy remains smaller today than it was in 2008. With anemic growth and continued austerity, social indicators have drastically worsened, with poverty doubling since 2007. Unemployment, at 14.2 percent, remains higher today than during the height of the global recession. (…) Without hundreds of millions in financial support from Venezuela [through the Petrocaribe energy agreement] and China the impact of IMF-led austerity would likely be far worse and, ultimately, politically untenable.

The paper argues that, if the U.S. really wants to help Jamaica recover economically, it should encourage multilateral development banks “to work with Jamaica and other creditors to provide meaningful debt relief, freeing up needed resources to invest in the future of the country.”

In Obama’s meeting with CARICOM, he is expected to discuss Vice President Joe Biden’s Caribbean Energy Security Initiative which, Zuñiga explains, is “related to energy security and our shared efforts to promote a more — more diverse, cleaner, and more sustainable energy future for the Caribbean.” 

“Clean” energy, i.e., natural gas (though environmentalists generally reject the “clean” moniker).  For some time now, Vice President Joe Biden and Beltway analysts with close ties to the U.S. energy industry have been touting the virtues of natural gas, specifically U.S. exports of liquefied natural gas, for the Caribbean region.  One of the main arguments is that Venezuela’s Petrocaribe cooperation agreement, which provides oil to the region at highly advantageous credit terms, is unsustainable and undesirable due to the political influence that Venezuela has gained in the region.  State Department Cables published by WikiLeaks show that the U.S. aggressively pressured Caribbean and Central American governments not to sign onto Petrocaribe despite the enormous economic benefits of the agreement (as can be seen in countries like Haiti and Jamaica).  Clearly, U.S. efforts to counter Petrocaribe continue to this day. (Look out for the upcoming book The WikiLeaks Files that will include two chapters on these and other Latin America-related cable revelations authored by CEPR staff). 

On to Panama, where Obama will interact with his counterparts from all over Latin America and the Caribbean at the Seventh Summit of the Americas.  According to Zúñiga, Obama will be “focused on moving beyond some of these [sic] past divisiveness within the Americas [and] finding new ways to engage our partners on a basis of mutual interest and mutual respect.”  According to Ben Rhodes, the White House has fully absorbed the lessons from the past: “Having gone through two previous summits, [we] did not think it was constructive for the United States to try to isolate Cuba from the broader community within the Americas.”  Now that Obama has begun normalizing relations with Cuba and stopped barring Cuba’s participation in the Summit of the Americas all that “past divisiveness” (read: past U.S. isolation in the region) will quickly become a distant memory. Right?

Not so fast.  While Obama may be seeking to make peace with Cuba, he has simultaneously taken a much more aggressive stance toward Venezuela. On December 18 of last year, literally one day after announcing his “new course” on Cuba, Obama signed into law a bill mandating targeted sanctions against Venezuelan officials despite the opposition of every Latin American country and Venezuelan human rights defenders.  Obama’s support for the sanctions legislation was useful in placating Cuban-American members of Congress; however, as CEPR policy analyst Alex Main noted in The Hill at the time, “allowing legislators stuck in a Cold War mentality to steer U.S. Venezuela policy is dangerous and risks wrecking the good will that the administration’s Cuba detente is generating throughout the region.”

On March 7, the White House decided to go a significant step further and issued an executive order declaring Venezuela “an extraordinary threat” to “national security” and announcing sanctions against Venezuelan officials that went beyond the mandate of the December sanctions legislation.  What motivated Obama to do this?  As CEPR co-Director Mark Weisbrot noted in a recent U.S. News and World Report op-ed, normalizing “relations with Cuba is generally consistent with the broader strategy of opposition to Venezuela and other left governments that have been elected and re-elected since 1998.” 

Needless to say, Obama’s executive order has caused consternation and outrage throughout the region.  The Community of Latin American and Caribbean States (which includes every government in the region except the U.S. and Canada) rejected “the implementation of coercive, unilateral measures contrary to the international law.”  Obama’s Latin America team now appears to be frantically trying to abate the coming storm in Panama. Ben Rhodes “clarified” the administration’s position, explaining, “The United States does not believe that Venezuela poses some threat to our national security.”   And Thomas Shannon, senior advisor to Secretary of State John Kerry, has just made an unexpected trip to Caracas to try to smooth the waters with the Venezuelan government before the April 10 summit begins. But it is unlikely that any of this will be enough to keep the issue of the Venezuela sanctions off the table in Panama. 

Also while in Panama, President Obama will “meet with the different Presidents of the SICA (Central American Integration System) grouping of nations.  That’s the Central American nations, where we have a very significant $1 billion security and capacity-building initiative…” (Rhodes).  CEPR’s Alex Main has dissected this billion-dollar aid plan focused on Guatemala, Honduras and El Salvador in NACLA and The Hill and noted that it would see assistance to police and military institutions rife with corruption and abuses increase significantly despite impunity around human rights violations perpetrated by state security forces.  Economic development assistance would increase by over 400 percent under the plan, but the fact that the White House has indicated that it will be used to bolster the Inter-American Development Bank’s multi-billion dollar Alliance for Prosperity plan in Central America’s Northern Triangle should set off alarm bells:

the “Alliance” plan appears to be largely focused on attracting forms of foreign investment that have arguably made life worse for many Central Americans and had little positive impact on the overall economic situation. These include investments in “strategic sectors” — textile manufacturing, agro-industry and tourism — which all too frequently offer workers poverty-level jobs and provoke the displacement of small farmers and entire communities whose rights and historic claims to land are rarely supported by state authorities.

Finally, it is worth noting that, although Obama is meeting with the CARICOM (Caribbean) group of governments and with the SICA (Central American) group of governments, he is not planning on meeting with the group that has by far the biggest heft in Latin America in terms of population and economic clout: UNASUR, the Union of South American Nations.  This could well be a symptom of the fact that South America today is largely outside of the orbit of influence of the U.S., with the peoples of the continent having elected governments that largely reject U.S.-backed economic policies and foreign policy goals.  UNASUR has called for Obama to rescind his executive order against Venezuela and engage in constructive dialogue with the Venezuelan government.  We’ll soon find out whether Obama is listening.     

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